mortgage first payment

tedglen3

Hello, I was just wondering how do mortgage payment work. Do you have to pay first payment the day you start mortgage, or is it one month later. Also is the first payment double?

:money:

maninthestreet

Check your mortgage documentation - when does it state the mortgage payment will be taken from your bank account, and does it state you pay in advance or in arrears? As an example, if you complete on April 15th, and you pay in advance on the 1st of each month, the payment taken on the 1st of May will include interest from the 15th April to the 31st May.

kingstreet

In the old days, banks charged in arrears and building societies charged in advance. So if you got a mortgage from a bank, you'd normally pay one month's payment a month after completion.

The building society system made it difficult. If you complete half way through a month, you'd pay half a month's interest (known as accrued interest) plus a full month's payment on top. That would be about two weeks after completion.

If you get a mortgage from a lender like Halifax today, they still use the advance payment system, so the point you complete in the month will influence the size of your first payment.

In addition, Halifax mortgage offers have an assumed completion date which triggers enormous confusion as everyone thinks they will start to pay from then, even if they don't complete. That isn't the case.

Best advice to you is keep two months payments on one side to cover the accrued interest and first regular payment. They will write to you at completion and notify you of what payments will be made and when.

kingstreet

maninthestreet wrote: »

Check your mortgage documentation - when does it state the mortgage payment will be taken from your bank account, and does it state you pay in advance or in arrears? As an example, if you complete on April 15th, and you pay in advance on the 1st of each month, the payment taken on the 1st of May will include interest from the 15th April to the 31st May.

If it's a repayment mortgage, it's worth bearing in mind it will be interest only from 15 April to 30 April and capital and interest, as in a regular monthly payment, to cover 1 May to 31 May.

tedglen3

thanks a lot for all help

puresilk

My completion date is 6th of May.

Halifax told me that the first payment will be 14 days after completion hence 20th May.

And this will include the interest so the payment will be higher.

After that They told me I cn ring them and ask tell them what date I want my regular payments to come out from.

kford224

I was wondering the same on this very thing!! We are due to complete around the 21 April, but when we set the mortgage up with Santander we asked that payments are taken on the 1st of each month.

So I take it then, as we're doing repayment, that we'll effectively pay for the 21st April - 31st May on the 1 May?! :huh: